AdviceInvest.com -- Questions and Answers

Question: What do those stock ratings mean anyway?
Answer: Different brokers/analysts have slightly different meaning for ratings so here are a few of them:

Strong Buy - The stock is expected to appreciate more than 20%.
Outperform - The stock is expected to outperform the market and is undervalued. Same as a Buy rating or Over Weight rating or Accumulate rating.
Market Perform - The stock is expected to perform in line with the market and is evenly valued. Same as a Hold rating or Equal Weight rating.
Underperform - The stock is expected to underperform the market and is overvalued. Same as a Sell rating or Under Weight rating.

Question: What is the max contribution for a Roth IRA?
Answer: The maximum Roth IRA contribution for 2009 is $5000 per individual.

Question: Should I sell all my stocks/mutual funds given the current environment?
Answer: At this point we are close to the bottom, continue to contribute to the same mutual funds and hold on to stocks where you have already lost over 50 percent. If you lose everything in a stock you can at least deduct the losses. The market will come back over the next few years. Keep contributing so that your money will grow even more as the market improves.

Question: What on-line brokerage should I go with, and how much money do I need to start investing?
Answer: Scottrade is a good on-line brokerage. You can buy as little or as many shares of a stock for only 7 dollars per order. Our recommendation is to start with 2000 dollars, that is extra cash you can afford to lose. Then pick a few stocks in different sectors. Choose one dividend bearing stock in utilities, or freight/shipping and maybe a tech stock and a healthcare stock. some recommendations are on our stock picks page.

Question: What is an ETF?
Answer: An Exchange Traded Fund (ETF) is like a mutual fund except there are less penalties for withdrawal since it trades more like a stock, and the fund price changes while the markets are open since it represents a basket of stocks. A mutual fund is priced at market closing each day and purchases of the fund occur after the current trading day and before the next trading day. Mutual Fund managers make stock purchases based on cash inflows to the fund.

Question: Should I refinance?
Answer: You should refinance if you will be in your home at least 5 more years and if the quoted interest rates is at least 1 percent below your current rate. Banks tend to charge higher closing costs becuase they know consumers will be interested in historically the lowest rates regardless of closing costs. You should not pay a mortgage broker more than 3500 dollars in closing costs including all fees and the appraisal. Before getting the appraisal make sure the loan will go through. The appraisal fee is not refunded if the loan falls through.